GRAINS-Soybeans drop again, down 5 pct from record high

* U.S. soy falls for 5th day, harvesting and rain weigh
* Grain traders cautious before Wednesday's USDA reports
* Trade anticipates USDA cuts to supply/demand after drought
* Wheat market eyes poor weather in Australia, Black Sea
(Adds closing prices, French push for food stockpiles)
By Tom Polansek
CHICAGO, Sept 11 (Reuters) - U.S. soybean futures set a
three-week low on Tuesday as a swift harvest and profit-taking
before key reports sparked selling that accelerated a five-day
retreat from record highs.
Benchmark soybeans for November delivery dropped below
$17 a bushel for the first time since Aug. 21, while nearby
soybeans for September delivery ended down 5 percent from
last week's all-time high of $17.94-3/4 a bushel. Corn futures
touched a seven-week low.
Funds have been liquidating bullish bets in the markets
heading into U.S. Department of Agriculture supply-demand and
crop production reports due on Wednesday. Investors are
uncertain about the extent of crop damage the reports will show
from the worst U.S. drought in more than half a century.
Some traders suspect the markets have already factored in
the worst of the drought, which devastated crops across the
Midwest. Also, rains late last month could have improved yields.
"There is some sense out there that a top may be close or in
already," Jim Gerlach, president of A/C Trading, said of the
markets.
Chicago Board of Trade new-crop November soybeans, the most
actively traded contract, dropped 1 percent to $17.01-1/2, and
nearby September soybeans lost 1 percent to $16.96-1/2 a bushel.
December corn slumped 0.7 percent to $7.77-3/4 a bushel.
Soybean and corn futures reached record highs during the
summer as the drought slashed harvest prospects at a time when
stocks of the crops were already low.
Concerned about tightening supplies, French President
Francois Hollande on Tuesday proposed the creation of strategic
stockpiles of agricultural commodities to prevent extreme price
swings on international markets.
Wednesday's U.S. supply-demand report will be scrutinized to
see if more supply cuts are made due to the drought and to what
extent demand has been cooled by surging prices.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Trade estimates for US corn/soy production:
Estimates for US ending stocks:
Trade estimates for global ending stocks:
Graphic: production, stocks: link.reuters.com/myr45s
Graphic: U.S. harvested acres:link.reuters.com/zyt22t
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Analysts polled by Reuters predict the USDA report will show
the drought has slashed nearly 5.0 billion bushels from the corn
crop, or about $40 billion worth at current prices.
For soybeans, analysts on average predict the USDA will trim
its crop forecast to 2.657 billion bushels from 2.692 billion in
August. However, some expect a slight increase from the August
figure because of beneficial Midwest rains last month.
HARVESTS ADVANCE
The advancing corn and soybean harvests have added pressure
to prices as they brought new supplies onto the markets.
The USDA's first update on this year's soybean harvest on
Monday showed the crop was 4 percent harvested, which topped the
five-year average of 2 percent and expectations for 3 percent
harvested.
The USDA also said the condition of soy plants had improved,
reinforcing market sentiment that parts of the Midwest benefited
from rain last month.
The corn harvest was 15 percent complete, above the
five-year average of 5 percent.
"Newly harvested corn is hitting the market faster than it
can be used," said Karl Setzer, grain solutions team leader for
MaxYield Cooperative.
Traders also were liquidating bullish bets as they waited
for the Federal Reserve to wrap up a two-day policy meeting on
Thursday, which could bring further stimulus action or guidance
on interest rates, said Rich Nelson, chief strategist for
Allendale.
"The trade has (taken) risk off until we get confirmation,"
he said.
EGYPT BUYS WHEAT
CBOT December wheat stumbled 0.7 percent to $8.83-3/4
a bushel on spillover pressure from losses in the corn market.
Egypt, the world's top wheat importer, bought 235,000 tonnes
of wheat from Ukraine, Russia and France on Tuesday.
It was Egypt's sixth international wheat purchase in a month
and the first time it bought wheat since January. The deals came
amid growing worries that Russia and other Black Sea suppliers
may restrict grain exports before the end of the year after a
drought slashed production for the second time in three years.
Russia insists it will not curb exports.
Australia, another key wheat exporter, cut its forecast for
wheat production in the 2012/13 crop marketing year by about 7
percent from its previous forecast to 22.5 million tonnes due to
dryness.
Prices at 3:09 p.m. CDT (2009 GMT)
LAST NET PCT YTD
CHG CHG CHG
CBOT corn 782.25 1.25 0.2% 21.0%
CBOT soy 1696.50 -16.50 -1.0% 41.6%
CBOT meal 523.90 -3.30 -0.6% 69.3%
CBOT soyoil 55.31 -0.65 -1.2% 6.2%
CBOT wheat 860.00 -8.25 -1.0% 31.8%
CBOT rice 1449.00 -4.50 -0.3% -0.8%
EU wheat 263.25 -2.00 -0.8% 30.0%
US crude 96.92 0.39 0.4% -1.9%
Dow Jones 13,323 69 0.5% 9.1%
Gold 1731.79 7.00 0.4% 10.7%
Euro/dollar 1.2856 0.0099 0.8% -0.7%
Dollar Index 79.8630 -0.3890 -0.5% -0.4%
Baltic Freight 662 -4 -0.6% -61.9%
(Additional reporting by Karl Plume in Chicago, Gus Trompiz in
Paris and Naveen Thukral in Singapore; Editing by Himani Sarkar,
Maureen Bavdek, Bob Burgdorfer, Dan Grebler and David Gregorio)